While much has changed, there remain reasons for concern. Most perplexing is the fact that with all of the intermediaries in place between advertiser and publisher, few seem to be looking out for the advertisers’ best interests.
The reasons for this lack of an advertiser-centric perspective are many and include greed, a lack of knowledge, insufficient oversight processes and often times indifference up and down the programmatic digital media supply chain.
Thus, it was with great interest that I read a recent article on Adexchanger.com entitled; “Index Exchange Called Out for Tweaking Its Auction.” In short, the article dealt with the fact that Index Exchange had altered its auction processes, without notifying advertisers, ad agencies or DSPs. Ostensibly, the exchange’s motivations for this move was to boost its market share, although in fairness, they claimed that they believed their approach reflected “industry practice.”
Of note, Index Exchange made the aforementioned change more than one year ago, employing a technique referred to as bid caching. In short, bid caching is where the exchange retains losing bids in an effort to run advertiser content on subsequent content viewed by the consumer. From an advertiser perspective there are a number of issues with this practice, as detailed by author Sarah Sluis of the aforementioned article on Adexchanger:
- Buyers will bid higher prices for the first page in a user session. Thus, if the losing bid is retained and the ad is served deeper into a user session, the buyer will have overpaid for that inventory.
- Any delay between the initial bid and the ad actually being served, using a bid caching methodology, increases the chance that the DSP will have found the user elsewhere, resulting in the campaign exceeding the pre-determined frequency caps.
- Brand safety definitely comes into play, because even though the ad is served on the same domain, it is on a different page than what was intended.
What is truly remarkable about this scenario is that buyers just learned of this practice and, according to Adexchanger, “not from Index Exchange.”
How many advertisers were negatively impacted by Index Exchange’s unannounced move? What were their agency and adtech partners doing in the placement and stewardship of their buys that an exchange’s shift in auction approaches went undetected for more than one year? Unsettling to be sure.
Ironically, this exchange had implemented a similar move previously, adopting a first-price auction approach, which was known to publishers but not announced to buyers.
Advertisers would be right to raise questions about the current state of programmatic affairs; exchanges not notifying the public of shifts in auction methodology, agency buyers and DSPs unable to detect these shifts to adjust their bid strategies, ad tech firms not catching the shift to safeguard brand ad placements, and publishers that were aware, but settled for the higher CPMs resulting from the shift, rather than informing the buy-side.
This is disheartening news, particularly when one considers the percentage of an advertiser’s dollar that goes to fund each of their intermediaries (at the expense of working media). Yet, advertiser fueled growth in programmatic digital media continues unabated.
Clearly a case of buyer beware. Advertisers that have not already reviewed their supplier contracts or enacted the “right to audit” clauses of their agency and adtech supplier agreements may want to make plans to do so as they begin finalize their 2019 digital media budgets. As the old saying goes:
“The buyer needs a hundred eyes, the seller but one.”